C3.ai (NYSE: $AI) is a prominent supplier of enterprise AI software for accelerating digital transformation. Founded in 2009 by Tom Siebel, C3.ai enables organizations to rapidly develop, deploy, and operate large-scale AI, predictive analytics, and IoT applications. Its model-driven architecture enables frictionless integration with existing IT infrastructure.
C3.ai serves customers across various industries, including oil and gas, manufacturing, aerospace, healthcare, and telecommunications. The company went public in 2020 and is headquartered in Redwood City, California.
On Wednesday, February 28, 2024, C3.ai reported impressive financial results for its fiscal third quarter, which ended January 31, 2024. The company’s strong performance is attributed to its significant first-mover advantage in the rapidly growing AI market, increased customer engagement, and demand for AI-driven solutions.
CEO and Chairman Thomas M. Siebel expressed enthusiasm about the company’s performance, stating, “We had a great quarter. Total revenue of $78.4 million grew 18% year-over-year, exceeding our guidance range. Customer engagement grew 80% year-over-year. Our significant first mover advantage in Enterprise AI is generating tailwinds as market interest in adopting AI accelerates.”
Revenue and Profitability
The company reported total revenue of $78.4 million, representing an 18% increase compared to $66.7 million in the previous year. Subscription revenue, which constituted 90% of the total revenue, grew by 23% to $70.4 million, up from $57.0 million one year ago. This growth in subscription revenue underscores the company’s successful transition to a subscription-based model.
The company’s gross profit margins remained strong, with a GAAP gross margin of 58% and a non-GAAP gross margin of 70%. However, the company reported a GAAP loss per share of $0.60 and a non-GAAP loss of $0.13. The company has a strong balance sheet with $723.3 million in cash, equivalents, and marketable securities.
C3.ai Advances Business and Technology in Q3 2023
In the third quarter of 2023, C3.ai made significant progress on multiple fronts to advance its business and technology strategy. C3.ai closed 50 new agreements in Q3, an 85% increase over the previous year. New clients spanned industries like healthcare, telecommunications, government, manufacturing, and chemicals. Bookings from channel partners surged 337% as partner networks expanded.
C3.ai showcased innovative Enterprise AI deployments with customers like Holcim and DLA Piper. It also conducted 17 pilots of C3 Generative AI across regions and industries. Generative AI offerings feature deterministic responses, full traceability, and omni-modal data support.
Federal business grew over 100% as C3.ai extended agreements with agencies like the U.S. Department of Defense. A new partnership with Paradyme aims to enhance AI capabilities at government facilities. State and local governments saw the most robust bookings growth in Q3.
Upbeat Guidance Exceeds Estimates
Buoyed by strong sales momentum and an expanding market for enterprise AI software, C3.ai issued an upbeat revenue forecast for Q4 of fiscal 2024. C3.ai expects total revenue between $82 million and $86 million, ahead of analysts’ estimates of $84.45 million. The full-year revenue is projected to be between $306 million and $310 million, surpassing the consensus forecast of $306.1 million.
The upbeat guidance is underpinned by a 73% increase in the qualified sales pipeline Y/Y. On a non-GAAP basis, the company estimates a loss from operations of $43.5 to $51.5 million for the fourth quarter and $115.0 to $123.0 million for the full year.
In a leadership change, Hitesh Lath becomes CFO effective March 1, replacing Juho Parkkinen. The company also announced C3 Transform 2024, its international AI user conference, for March 2024.
C3.ai Stock Shows Significant Upswing
C3.ai is currently trading at $36.96, reflecting a noteworthy increase of 24.28% from the previous close of $29.69. The 52-week change for AI stands at 39.32%, outperforming the S&P 500 52-week change of 27.34%.
Over the past year, AI’ ‘s highest closing price was $48.87, while the lowest was $16.79. The 50-day moving average currently stands at $27.56. The 200-day moving average is $30.39.
With around 116 million outstanding shares, it has seen an average trading volume of 8.32 million over the last ten days. The company’s market capitalization is estimated at $4.388 billion. The 52-week trading range goes from a low of $16.79 to a high of $48.87.
Is $AI Worth Buying in 2024?
C3.ai’s fiscal Q3 performance affirms its leadership in enterprise AI solutions. With multiple tailwinds supporting demand and an expanding product portfolio, the company looks set to sustain its growth trajectory over the long term.
The results bode well for AI stock, which seems undervalued at current levels based on the growth exhibited this quarter. The share price upside could be significant as metrics like customer engagement and bookings continue rising over the coming months.
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